Monday, May 24, 2010

State of the Market - 5/24/10

A very unimpressive day today on Wall Street, as a potential bounce opportunity from Friday was wasted by the bulls and stocks fell with modest losses. The market opened lower but did move up early on, which was a positive sign. However, every intraday bounce was sold off and stocks couldn't make much progress higher than where they closed things Friday. They sold off for most of the afternoon and finished at their lows for the day with an awful close. Volume was much lower.

I said in the video last night that the bulls certainly had a good opportunity to produce if nothing else a relief rally early this week as breadth and sentiment was historically stretched to the downside last Thursday. The fact that they could not do so today is obviously very discouraging. If we break through Friday's lows soon (as in this week) then I do think all heck will break loose and we could still be looking at an historically significant event. When a market can't bounce in the face of such extremely negative numbers, it tells you something.

If you are trying to be an optimist here, you can look back to February 5 of this year for some potential encouragement. The market had been selling off hard at that point and put a one day reversal in after having a major sell-off the day before (down over 3%). Coincidentally, that reversal was also on a Friday. The following Monday, the market went nowhere and I, like many others, were expecting the worst because of a lack of follow-through. However, after moving sideways for the rest of the week, the markets finally did breakout a bit to the upside the following Monday and went on another major rally. Could it happen again? I have learned this year not to put anything past this market. I can't say I am expecting it but it is something I will watch for as a potential scenario.

Good luck if you're trading - I am still in cash and am in no rush to do anything. Gold did bounce a bit today and I will still keep a close eye on it, but that's really it. Take care and be careful - it's still a really difficult market.

Overall Market Timing Score

March 20, 2014 -2March 19, 2014 +1(Max Score +6, Min Score -6)

The Market Timing Score has six factors that I record on a daily basis. These include breadth indicators, moving average indicators, accumulation and distribution indicators, and overbought and oversold indicators.

The max score of the Market Timing Score is +6, but this is very rare. Typically a score of +4 or +5 tells you that the market is very bullish. A score of +3 or +2 tells you that the market is bullish, but there are a few reasons for concern. A score of +1 or 0 tells you that cash is the best place to be. The scores work the exact same way on the negative side for bearish markets.

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Chart Swing Trader is a website intended for the education of online stock traders. The website is an information service only. The information provided herein is not to be construed as recommendations to buy or sell stocks of any kind. They are simply the opinions of the author. It is possible that the editor of this blog may own, buy, or sell stocks presented. All investors should consult a qualified professional before trading any stock. The author is not an investment advisor. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts made by the author are committed at the reader's own risk, financial or otherwise.